Investors Expect a Fed Pause, Not an End to Rate Increases

S&P 500 futures on Wednesday rose as investors bet the Fed will not change its prime lending rate after a series of unexpectedly positive economic data.

If the central bank behaves as expected, it would break the record of 10 consecutive rate hikes dating back to March 2022, the Fed’s most aggressive pace since the 1980s. Still, many expect Wednesday’s decision to mean a moratorium, not a reversal of hawkish anti-inflationary policies.

What Fed officials say may be more important than their actions. Central bank Chairman Jerome Powell is expected to indicate at a press conference after Wednesday’s meeting that the rate hike is not over yet. One reason is that the economy is still hotter than expected. Tuesday’s consumer price index report showed “core” inflation, which excludes energy and food prices, well above the Fed’s 2% target.

“Chairman Powell will send the message that there is more work to be done and willing to do to keep inflation under control,” Andrew Patterson, a senior economist at Vanguard, told Dealbook. Patterson believes the Fed is planning at least one more rate hike this year.

(Some think the Fed should even pause: Mohamed El-Erian, chief economic adviser to Allianz and a critic of the central bank’s handling of inflation, argued this week that recent data: support further rate hikes. )

Still, stock prices are soaring. The S&P 500 is in bull market territory, aided by the phenomenal performance of mega-cap tech stocks. Analysts describe an atmosphere of “fear of missing out” similar to the late 2020-2021 bull market. According to Morgan Stanley, retail investors bought U.S. stocks, especially high-profile tech stocks, in May, the biggest purchase in a month. Spread since 2010.

That’s why investors hope Mr. Powell doesn’t collapse the party.

Donald Trump appears in court in Miami. Faced with federal charges for the first time, the former president pleaded not guilty to accusations that he had endangered national security secrets by mishandling classified documents and obstructing investigations.Mr Trump Afterwards, we held a fundraiser In New Jersey, he spoke in a defiant tone.

Janet Yellen said US-China decoupling would be a “mistake”. The Treasury Secretary testified before lawmakers that economic ties with China remain important. Secretary of State Antony Brinken will visit Beijing next week.

A federal judge has temporarily blocked Microsoft’s deal to buy Activision Blizzard. movement It was meant to maintain the status quo as the FTC seeks to challenge the $69 billion acquisition. Microsoft has already faced pushback from US and UK regulators over the deal.

The EU has accused Google of anti-competitive conduct. Antitrust regulators have accused the company of using its dominance in online advertising to undermine rivals. The U.S. Justice Department filed similar charges against the tech giant in January.

European Union lawmakers have just approved the world’s first proposed regulation aimed at regulating artificial intelligence. The stakes are high. As the corporate world rushes to adopt tools like generative AI, governments are rushing to put up guardrails.

The AI ​​Act will impose unprecedented limits. Introduced in 2021, before ChatGPT went online. Its proposed requirements include a publicly available overview of copyrighted materials used to train AI systems. Safeguards to prevent generation AI from generating illegal content. And a ban on live facial recognition.

Margrethe Vestager, the EU’s head of competition, said this morning it was under consideration. Discrimination by AI Technology poses a greater risk than human extinction.

However, it is worth remembering that further negotiations with other European institutions, including national parliaments, will be required before the proposal becomes law.

Tech giants are trying to shape the EU’s efforts. Sam Altman, CEO of ChatGPT’s parent company OpenAI, recently warned that the company could exit Europe if AI laws are too strict. (he then backtracked) Other executives, including Alphabet’s Sundar Pichai, promised: Help the EU set the rules.

Europe is ahead. Policymakers in Washington agree that AI regulation is necessary, but legislation is not imminent. With that said, the White House has published best practice guidelines on how to test his AI systems.

China is also looking to catch up, especially with the goal of applying the same strict censorship to AI tools that it applies to other internet services. The Chinese government plans to prepare draft rules for lawmakers this year.

SoftBank’s former chief operating officer, Marcelo Claure, is set to announce his next big move on Wednesday. It is the creation of a new Latin America-focused growth stock company called Bicycle Capital, backed by Abu Dhabi’s sovereign wealth fund Mubadala. The company initially pledged $440 million and hopes to raise $500 million. Claure, who also has a stake in Family Office, will serve as executive chairman.

Latin America has long been a focus for Clauregrew up in Bolivia. He founded Latin American wireless distribution company Brightstar in 2013 and sold it to Japanese conglomerate SoftBank for more than $1 billion. After that, he led the restructuring of SoftBank-backed telecom company Sprint, then led its merger with T-Mobile. Claure later succeeded WeWork, a shared-office company that failed to go public in 2019, negotiated severance payments with co-founder Adam Neumann, and helped clear SoftBank’s investment.

Claure led SoftBank’s $8 billion Latin America fund, but resigned from the company last year after a multi-billion dollar salary dispute. He invested $100 million in Chinese fast-fashion company Shane this year and is the company’s Latin America chairman.

Traders are eyeing the region, It is attracted by a growing population due to increased purchasing power and by regulations that make it easier for foreign companies to invest. Venture capital investment in the country will reach $7.8 billion in 2022, after peaking at $15.9 billion in 2021 at the peak of the boom, according to the Latin American Venture Capital Association.

Bikes focus on Mexico and Brazil. “Latin America has a unique combination of great founders, a digitally savvy population and more opportunities than capital,” Claure said.

Binance, the world’s largest cryptocurrency exchange, fended off an SEC effort to freeze the assets of its U.S. operations at a public hearing on Tuesday. Perhaps more importantly, the federal judge overseeing the case questioned the agency’s efforts to use its powers to regulate the cryptocurrency industry.

The judge urged both sides to come to an agreement on an asset freeze. In a packed courtroom, District of Columbia Judge Amy Berman Jackson forced Binance to agree to a partial freeze on its U.S. division and the SEC to keep the company paying its bills.

Binance.US claimed the SEC’s demands amounted to a “death penalty” and SEC lawyers accused the company of taking billions of dollars worth of assets out of the country.

Jackson also expressed some skepticism about the SEC’s efforts to curb cryptocurrencies. The agency has accused both Binance and its big rival Coinbase of allowing the sale of unregistered securities, or crypto assets. She said the SEC’s use of its enforcement powers to regulate cryptocurrencies is “inefficient and cumbersome.”

That said, Jackson added that Binance’s surprise stance on the legal debate “sounded a bit hollow” given years of questions over the legal status of cryptocurrencies. .

SEC faced hotly contested second front Tuesdaywhen Republicans became members of the House Financial Services Committee sent him a letter It questions the proposed rule defining “exchange.”

Lawmakers said the proposed definition would include both centralized and central exchanges. Automated decentralized financial protocols can exceed the authority of government agencies and stifle innovation.

Board diversity increased slightly last year, according to the latest annual report shared exclusively with DealBook by Deloitte and the Alliance for Board Diversity. But Alisha Haridasani Gupta of The Times wrote that despite years of pressure on American companies, progress has been uneven as legislative measures requiring broader representation have been dismantled.

Women and Underrepresented Racial and Ethnic Groups As of June 2022, nearly 45% of Fortune 500 company board seats were held by women, up from 38% in 2020, but women of color accounted for 7.8% of those positions. only occupied.

“We still have a lot of work to do.” Carrie Oven, director of Deloitte’s Center for Board Effectiveness, said, adding that it will take decades for boards to reflect the diversity of the broader US population. At this point, gender equality on Fortune 500 boards is 20 years away, and it could take him 40+ years to properly reflect the growing Hispanic population.

Insufficient recruitment activities, Sid Wilson, chairman of the Alliance for Board Diversity, said several boards had high levels of diverse board members, which the report refers to as “recycled talent.” Stated. About 18% of female directors serve on more than one board, and she is 21% of women of color.

Almost all laws mandating diversity on boards have been repealed, including California boardroom allocations. And companies now face a difficult political and cultural climate that could put diversity initiatives under greater scrutiny and possible backlash.

But pressure from consumers and shareholders is unlikely to abatesaid Mr Wilson. “The reality is that from a demographic perspective, diversity is only going to increase. ”

Information of sale

  • Apollo, Sixth Street, and Warburg Pincus are reportedly among them. GreenSky bidder, a specialty finance company acquired by Goldman Sachs as part of its ill-fated foray into consumer finance. (semaphore)

  • bungee agreed buy a vitella, also a grain transporter, has invested $8.2 billion to create a new agribusiness giant. (WSJ)


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